Indonesia has unveiled plans to enjoy a bigger take of the profits from its
vast natural riches by limiting foreign ownership of its mines.

Under new rules, foreign companies must sell down their stakes in mines in the country, so that by the tenth year of production the assets are at least 51pc owned by Indonesian entities.

"The aim is the state has to get more," said Jero Wacik, Indonesia's energy and minerals minister. "For new investment it will be simple, but for existing investment there must be renegotiation."

The move represents the latest instance of resource nationalism, the mining industry's current bugbear.

The term describes the growing trend, fuelled by the rise in commodity prices, for governments to aim for bigger returns from their natural assets, be it through tax rises, increasing stakes in mining projects, or other means.

The industry reacted badly, warning that it would hit investment in the country's fast-growing mining sector - particularly since companies will have to reduce their holdings relatively early on. Mines are long-term investments that can take years to offer up returns on the funds ploughed in.

"It's impossible if in only 10 years after production they [foreign miners] have to divest 51pc of their stake in the mines," said Syahrir Abubakar, executive director of the Indonesian Mining Association. "This policy will threaten Indonesia's mining investment climate."

The move, which strengthens a 2010 regulation requiring foreign investors to sell a 20pc stake to locals after five years, comes as the government renegotiates existing royalty contracts with major foreign investors such as Freeport McMoRan Copper & Gold and Newmont Mining Corp.

It is understood that Bumi, the FTSE 250 Indonesia coal mining vehicle backed by financier Nat Rothschild, does not expect to be affected.

Sources close to the company said that Indonesian ownership is already "comfortably" above the 51pc threshold, given the 47pc stake held by Indonesia's powerful Bakrie family and their associate Samin Tan, and a further 13pc held by businessman Rosan Roeslani.

Indonesia, south-east Asia's biggest economy, is the world's top exporter of thermal coal and tin.